MCL 206.36 — "Taxable income" of resident estate or trust defined

(1) "Taxable income" in the case of a resident estate or trust means federal taxable income as defined in the internal revenue code subject to the following adjustments:
(a) Add gross interest income and dividends derived from obligations or securities of states other than Michigan, in the same amount which has been excluded from federal taxable income less related expenses not deducted in computing federal taxable income because of section 265 of the internal revenue code.
(b) Add taxes on or measured by income to the extent the taxes have been deducted in arriving at federal taxable income.
(c) Add losses on the sale or exchange of obligations of the United States government, the income of which this state is prohibited from subjecting to a net income tax, to the extent that the loss has been deducted in arriving at federal taxable income.
(d) Deduct, to the extent included in federal taxable income, income derived from obligations, or the sale or exchange of obligations, of the United States government which this state is prohibited by law from subjecting to a net income tax, reduced by any interest on indebtedness incurred in carrying the obligations, and by any expenses incurred in the production of such income to the extent that the expenses, including amortizable bond premiums, were deducted in arriving at federal taxable income.
(e) Adjustments resulting from the application of section 271.
(f) Deduct an adjustment resulting from the allocation and apportionment provisions of chapter 3.
(g) For tax years beginning after December 31, 2011, eliminate all of the following:
(i) Income from producing oil and gas to the extent included in federal taxable income.
(ii) Expenses of producing oil and gas to the extent deducted in arriving at federal taxable income.
(h) For tax years beginning after December 31, 2024, federal taxable income must be calculated as if both of the following conditions applied, subject to any necessary adjustments under subparagraph (iii):
(i) Sections 168(n) and 174A of the internal revenue code were not in effect.
(ii) Sections 163(j), 168(k), 174, and 179 of the internal revenue code applied as those provisions were in effect on December 31, 2024.
(iii) The state treasurer shall, if necessary, modify the application of any references in the internal revenue code to the sections identified in subparagraphs (i) and (ii) in a reasonable manner to carry out the purpose of this subdivision, including, but not limited to, modifying the application of section references that were amended under Public Law 119-21.
(i) For tax years beginning after December 31, 2021, federal taxable income must be calculated as if the transition rules under section 70302 of Public Law 119-21, including, but not limited to, any provisions related to the application of section 174A of the internal revenue code, do not apply.
(2) The respective shares of an estate or trust and its beneficiaries, including, solely for the purpose of this allocation, nonresident beneficiaries, in the additions and subtractions to taxable income shall be in proportion to their respective shares of distributable net income of the estate or trust as defined in the internal revenue code. If the estate or trust has no distributable net income for the taxable year, the share of each beneficiary in the additions and subtractions shall be in proportion to his or her share of the estate or trust income for the year, under local law or the terms of the instrument, which is required to be distributed currently and any other amounts of such income distributed in the year. Any balance of the additions and subtractions shall be allocated to the estate or trust. If capital gains and losses are distributed or distributable to a beneficiary or beneficiaries under the internal revenue code, the fiduciary shall advise each beneficiary of his or her share of the adjustment under section 271. The election or failure to elect under section 271 with respect to capital gains and losses taxable to the estate or trust shall not affect the beneficiary's right to elect or not to elect under section 271.
(3) An addition or subtraction shall not be made under this section which has the effect of duplicating an item of income or deduction if the taxpayer establishes to the satisfaction of the commissioner that the item is already reflected in federal taxable income. If an addition or subtraction with respect to the sale or exchange of obligations of the United States government proper adjustment, in accordance with rules promulgated by the department, of the deduction for excess of capital gains over capital losses shall be made.
(4) As used in this section, "oil and gas" means oil and gas that is subject to severance tax under 1929 PA 48, MCL 205.301 to 205.317.